Having seen off England, France and Argentina in impressive fashion already this year, the resurgent Scots produced another big display against top-tier opposition as they ran the double world champions close on Saturday.
After fighting back from 14-0 down to go in level at half-time through tries from Matt Fagerson and Kyle Rowe, the Scots were ultimately left to lament their failure to score while Ben-Jason Dixon was in the sin-bin early in the second half.
Townsend felt the forward was fortunate to avoid seeing his yellow card upgraded to a red for what he felt "looked like a head-on-head collision" with Scott Cummings.
The Springboks capitalised on this reprieve to pull away again with three tries in the space of 10 minutes either side of the hour mark.
Scotland hit back again through Josh Bayliss and Ben White to close to within a converted try of their hosts heading into the final 10 minutes before Jesse Kriel eventually took the game beyond the spirited visitors with the Boks' sixth try in the 77th minute of an epic encounter.
"It's a mixture of pride and frustration," said head coach Townsend. "We were encouraged but also frustrated at half-time. We managed to get ourselves back into the game and we were causing South Africa issues and creating opportunities.
"There was a really good base for us to build on and I felt at the beginning of the second half we were excellent. We got into the 22 on a couple of occasions but the frustration was not scoring when we were up a man. Then we were sloppy for 10 minutes and we were suddenly 21 points down.
"The period after that showed the best of Scottish rugby, our players' toughness and conditioning, because there were some big moments that got us back into the game.
"At 70 minutes, I really believed that we would go on and win the game but it wasn't to be."
Despite being unable to eke out a first-ever win in South Africa, Scotland were able to draw some encouragement from claiming a four-try bonus point against an opponent who restricted them to no tries in each of their previous two meetings in 2023 and 2024.
"Oh absolutely, there's a lot more in us," said Townsend, drawing on the positives. "With the amount of opportunities that the players created today through work, through skill and intelligence, we've got to take more of them to beat the world champions."
